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A Project Requires an Initial Investment in Equipment of $90,000

question 49

Multiple Choice

A project requires an initial investment in equipment of $90,000 and then requires an investment in working capital of $10,000 at the beginning (t = 0) . The project is expected to produce sales revenues of $120,000 for three years. Manufacturing costs are estimated to be
60% of the revenues. The assets are depreciated using straight-line depreciation. At the end of the project, the firm can sell the equipment for $10,000. The corporate tax rate is 30% and the cost of capital is 15%. What would the NPV of the project be if the revenues were higher by
10% and the costs were 65% of the revenues?

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Intertidal Zone

The coastal area that is exposed to air at low tide and submerged at high tide, hosting a diverse array of adapted organisms.

Land Area

The total surface area of the Earth that is covered by land, excluding oceans and other bodies of water.

Runoff

Water from rainfall, snowmelt, or irrigation that flows over the ground surface and can carry pollutants into bodies of water, affecting water quality.

Sediments

Particles of rock, sand, or organic materials that are transported and deposited by wind, water, or ice, and that accumulate in layers on the Earth's surface.

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